RCA

Is the Second Great Depression Imminent?

On Dec 15 10:20 AM GMiki wrote:

> RCA, Not so fast. That is, it takes time to drill and establish producing
> wells. Do you think they haven't been looking?

Yes, of course they have been looking. And much has been found.

Many large (if not huge) reserves have been found, but they are in places that are very uneconomic to pursue at today's prices. Some require new drilling technology, but at $200/bbl many of these start to look attractive, new technology will be developed, and drilling will commence.

There will be some latency in getting this bonanza to market, and there will be some latency in getting alternative fuels ramped up. There will be disruptions. But it will happen, and sooner than most people would (or want to) believe, peak oil will not matter anymore.

Pollyanna? No, more akin to Cassandra, who was endowed with the gift of prophecy but fated by Apollo never to be believed.

I am simply a realist who has witnessed many amazing realities that the popular "wisdom" proclaimed couldn't be done. Human ingenuity, when motivated by feasible, realistically obtainable profits and a nay-saying public always wins. The fact that there are skeptics is a tautological necessity.

Is the Second Great Depression Imminent?

Yes, there is a finite supply of oil. But your analysis ignores the reality of the marketplace.

We will most assuredly run out of *cheap* oil within the next decade. But several things will happen to alleviate the dire circumstances you portray.

- With the concomitant high price of oil the world will find it profitable to drill in previously uneconomic locations which warehouse a large untapped reserve.

- The high price of oil will also rejuvenate the alternative fuels industry. Electricity, natural gas, hydrogen, et al will find it easy to compete when gasoline is $8+ a gallon.

- Habits and philosophies will change. Gone will be the gas-guzzling trucks, SUVs, and muscle cars. Replacing them will be super-mini bug-like pods which get up to 120 miles a gallon, as people are forced to realize they just can't afford to maintain old lifestyles and habits. These cars will be supplied by auto manufacturers that don't even exist now, as the BIG three and most foreign companies won't be able to change designs, downsize, and retool fast enough. The biggest challenge will be trying to make a profit on such a significantly smaller usage of labor and materials. New companies with new paradigms and business models will be able to do that.

Npne of this will prevent the eventual, inevitable shrinking of the world's oil supply to nothing (nothing that anyone wants to exploit). But it will postpone that occurence until it is no longer relevant.

Crude Prices Plunge - UltraShort ETF Positioned for Profits

Even if your analysis is correct (I have my doubts) I hope you are kidding about "dusting off" your Hummer. Regardless of the price of oil, we need to wean ourselves from reliance on petroleum and its derivatives.

Dependence on oil is the fly in the ointment for America's foreign policy, our global leadership and respect, and the sustainability and viability of the environment. As long as we are dependent on oil (and particularly foreign oil) America will never be the respected global leader and economic power that it used to be.